CONSTEC aims to increase its business 92% by end of year

The executive director of Construction and Design (CONSTEC), Ashraf Abdel-Hakam, said that his company is implementing projects worth about EGP 340m to major companies, including SODIC, Samcrete, and Misr Italia.

In an interview with Abdel-Hakam, he noted that CONSTEC is preparing construction work in the New Administrative Capital.

What is the size of business the company targets in the current year?

The company aims to achieve carrying out projects worth EGP 500m by the end of the current year—an increase of 92% compared to EGP 260m in 2016.

Furthermore, during the current year, the company aims to expand the size of its activity in the market and contract with major companies to implement projects in various sectors, especially the real estate sector.

What is the size of investment in current projects?

The company is currently implementing projects worth about EGP 340m.

What are the current projects CONSTEC is implementing?

Some of the projects we are implementing are Villette in Eastown New Cairo for SODIC, with a value of approximately EGP 100m; the Pyramids Heights project for Samcrete Development (Part of Sami Saad Holding), with a value of EGP 65m; and the Caesar project in the North Coast, with investments worth EGP 80m. In addition, there are compounds in Sheikh Zayed and 6th of October City that are being developed ‏for a real estate investment company worth EGP 95m, as well as a phosphate factory for a Chinese company in Ain Sokhna worth EGP 15m.

Moreover, the company is keen on contributing to industrial, national, and developmental projects, especially in the New Administrative Capital, which will bring about great societal benefits, have a significant impact on the Egyptian economy, and alleviate the population congestion on the capital.

What are the challenges that the construction sector faces?

The construction sector faces many chronic challenges, including legislative issues, which regulate the relationship between the owner and the contractor and amend the contracts between the parties to become “balanced” in order to ensure the preservation of the rights of the contractor and companies that carry out projects alike. The recent period has seen the urgent need for contracts under new circumstances represented in price increases of building materials and raw materials following the rise of the dollar value, the Egyptian pound flotation, the application of the value-added tax (VAT), and raising the prices of petroleum derivatives.

Furthermore, the successive changes in the prices of raw materials make it difficult for companies to determine the cost of tenders, especially in long-term construction contracts, and then the adoption of the balanced contract will contribute to resolving the crisis and push the sector.

What are the needed actions to revive the sector?

It is important to activate the role of banks and banking institutions in providing financing and supporting contracting companies, whether operating in state projects or the private sector, especially as the boom witnessed by the construction sector guarantees banks achieve target profits and maintain customer deposits.

In addition, it is imperative to address the crisis of the shortage of trained workers, which affects all contracting companies and represents a major obstacle in light of the increasing volume of projects currently being implemented to meet special specifications of quality, accuracy, and speed of implementation. The government has to develop the industrial sector and the technical-education system and to raise the efficacy of workers.

Moreover, it is important to activate the role of the Egyptian Federation for Construction and Building, as well as establish training centres for workers to raise competencies.

It is also important to develop legal solutions to awarding tenders as not to be limited only to the lowest bid for the implementation of the project, but must be focused on technical evaluation to ensure the implementation of projects with the required quality and timeliness.

What is your opinion regarding the Compensation Law for construction companies?

The Compensation Law of contracting companies will contribute in solving a large part of the companies’ problems for a year and a half following the increases in the cost of constructing works of projects.

I think it is important to expand the scope of facilities granted to the contracting company to push forward the business and face the recent difficult challenges that have contributed to the exit of about 2,000 companies from the market. The state agencies must also adopt policies that help in reducing bureaucracy to stimulate investment.

What is your opinion regarding the partnership between the state and the private sector in carrying out real estate projects?

It is important to activate a mechanism of partnership between the state and the contracting companies, especially since the mechanism is applied in many countries and has contributed to the boom in the volume of implemented projects. The Egyptian market has many qualified companies to perform that role and has expertise, competencies, and financial capabilities. This mechanism contributes to the speed of implementation of projects and development plans of the state.

The state has taken a good step in determining the course of work in the New Administrative Capital, which is to assign the work of the projects to the Egyptian contracting companies, rather than to foreign ones, which the state resorted to at the beginning of the project’s proposal in order to speed up their completion and achieve the required quality. The use of a larger number of companies to implement projects and the size of opportunities in the market indicate the expected boom in the construction sector, as well as pumping new investments to solve problems facing the sector and stimulate companies.

It is important to develop the work system of contracting companies and to adopt quality control mechanisms for the project. In addition, take into consideration the periodic reports to monitor the implementation rates according to timelines and changes in the implementation process.

What is the size of money allocated to capacity building for employees?

The company periodically conducts and organises training courses to raise the efficiency of its employees. It has allocated about 15% of the new financial budget to these operations. The company also aims to recruit new employees and expand its team to ensure competition for the largest number of projects.

The company spent about EGP 10m during the last two years in the development and modernisation of machines and equipment, as well as the development of the work system. The company used a new model that uses several dimensions in drilling, drawing, and designing to achieve the targeted quality.

Will the company plan to participate in the New Administrative Capital projects?

The company started its preparations to participate in the New Administrative Capital projects by increasing the base of workers, hiring a larger number of qualified employees, and raising the competencies of the current employment of the company.

Excerpts

CONESTEC prepares to carry out work in the New Administrative Capital

The company has spent EGP 10m during the last two years on equipment development

The state should develop the industrial and technical-education system, and the shortage of trained workers is an obstacle